Innovation

Defence firms answer coronavirus call to arms

Updated: Apr 22

Source: AFR 31 Mar 20, published with approval

A Melbourne defence company that normally makes electrical systems for helicopters could start churning out ventilators to help meet the shortfall of life-saving machines needed to treat severe cases of coronavirus.

Amid a nationwide scramble to identify companies capable of making medical supplies, the defence industry could help fill some of the void.

Cablex, which makes electrical looms for the aviation industry, is in talks with the Victorian government about producing machines based on a foreign design under licence.

"We build a lot of electrical boxes. This is just another box," founder and chief executive Michael Zimmer told The Australian Financial Review.

Because of the urgent need for ventilators, Cablex would use a proven foreign design so regulatory approval could be quickly given. Given the low tolerance in defence for equipment failure, the industry has a culture of producing high-quality goods.

Mr Zimmer said Australian firms had the means to produce the necessary components for ventilators, and Swinburne University's "factory of the future" for advanced manufacturing could assist with rapid prototyping.

"There is a whole range of industrial capability and we would pull that together and do the final assembly."

Local industry

Lobby group Industry Voice, which represents Australian-owned defence SMEs, said a vibrant local industrial base was key to ensuring the nation remained self-reliant.

"We cannot be in a situation where foreign-owned subsidiaries are unable to provide rapid re-tasking of industrial output because of the requirements of an overseas parent or government that may well have different priorities," chief executive Brent Clark said.

The shift by defence companies into medical technology comes as the Morrison government flagged bringing forward spending on defence projects to provide the industry with a financial lifeline during the coronavirus crisis.

Payments fast-tracked

Defence Minister Linda Reynolds and Defence Industry Minister Melissa Price said payments to contractors would be made up to two weeks earlier than usual to help them with cash flow.

“That is why we brought forward the payment of more than $500 million to businesses in Australia, which ensures money is flowing into the Australian economy at a time of acute pressure.”

In a briefing for defence companies on Thursday, Defence Department deputy secretary in charge of acquisition Tony Fraser said all projects were being reviewed to see if some milestones could be broken into smaller packages and brought forward to earlier completion dates.

Essential industry

Mr Fraser said the department was also looking to have defence industry declared an essential industry so that components would not be held up by border restrictions imposed by some states.

The Defence Department will offer letters of surety to ward off creditors and asked financially stressed companies to contact the department if approached to sell their business.

The major defence companies have also been put on notice to ensure they pay subcontractors on time, while the Defence Department has been told to go easy on contractors if supply chains or workforces have been disrupted because of the virus.

Defence is pushing ahead with base construction projects to provide a stimulus to the building industry but has amended contracts to provide time and cost relief for COVID-19 impacts.